Criminal Intent in the Regulatory Context: A Post-Staples Study in Supreme Court Precedent

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1 Criminal Intent in the Regulatory Context: A Post-Staples Study in Supreme Court Precedent Rebecca A. Betts, Esquire 1 Charleston, West Virginia Synopsis Chapter 1 Cite as 16 E. Min. L. Inst. ch. 1 (1997) An Overview of Issues of Criminal Intent [1] Introduction [2] The Spectrum of Criminal Intent: From Specific Intent to Strict Liability Critical Issues in Measuring Criminal Intent [1] The Language of the Statute [2] The Magnitude of the Penalty [3] Lack of Unity Among the Elements [4] Willfulness [5] Knowledge [6] Responsible Corporate Officer Doctrine Conclusion An Overview of Issues of Criminal Intent. [1] Introduction. Life was much simpler when criminal conduct represented the concurrence of an evil-meaning mind with an evil-doing hand. 2 Crimes were serious matters matters beyond mere civil law or civilized conduct which warranted the ultimate in societal disapprobation. A guilty mind, one which intended wrong, was essential to this eighteenth century notion of criminal conduct. 3 No principle of law remains constant, however. The nineteenth century ushered in the Industrial Revolution, which triggered an entirely new and developing body of laws directed at the health, safety and welfare of the public. These laws were designed to strike a different balance, in which 1 Ms. Betts is the United States Attorney for the Southern District of West Virginia. The opinions expressed in this article are those of the author and not those of the United States Department of Justice. 2 Morissette v. United States, 342 U.S. 246, 251 (1952). 3 According to Blackstone, vicious will was an essential predicate to any crime. 4 W. Blackstone, Commentaries 21.

2 1.01 EASTERN MINERAL LAW INSTITUTE protection of the public and the public good were deemed more compelling than any issue of individual culpability. Thus was born the concept of the public welfare or regulatory offense. These offenses dispense[d] with the conventional [mens rea] requirement for criminal conduct awareness of some wrongdoing. In the interest of the larger good it [put] the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger. 4 Even though public welfare offenses have been with us in one form or another for over a century, courts continue to struggle not only with the elements which define a public welfare offense, but also with the extent to which criminal intent can or should be dispensed with. In recent years, prosecutions under environmental laws have proven fertile ground for this debate, though the issues involved are by no means limited to environmental crimes. Indeed, two recent United States Supreme Court decisions, Ratzlaf v. United States, 5 which involved a money laundering offense, and Staples v. United States, 6 which involved a firearms violation, have once again demonstrated that the law on the subject of criminal intent is neither settled nor static. 7 To understand the issues that still remain, particularly in the environmental and mine safety area, practitioners of regulatory law must understand the historical context of the law of criminal intent. This chapter will thus attempt to set forth a basic primer on United States Supreme Court law with respect to criminal intent in general, and in the regulatory context in particular. The Ratzlaf and Staples decisions will also be discussed in terms of their likely impact on regulatory prosecutions. [2] The Spectrum of Criminal Intent: From Specific Intent to Strict Liability. A wise judge once told me: No matter how simple a case seems, the more you study it, the more complex it gets. The same is unfortunately true with respect to the law of criminal intent. Crimes and criminal conduct should be readily understood as such, and the elements of those crimes 4 United States v. Dotterweich, 320 U.S. 277, 281 (1943). 5 Ratzlaf v. United States, 114 S. Ct. 655 (1994). 6 Staples v. United States, 114 S. Ct (1994). 7 Morissette, 342 U.S. at

3 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.01 should be similarly capable of ascertainment, particularly with respect to as fundamental a concept as criminal intent. The Staples decision teaches us otherwise, however. Criminal intent whether required and just how much is required remains elusive. 8 The practitioner is thus left to decipher those criteria applied by the Supreme Court in recent decades with respect to the ever critical issue of mens rea. Certain criteria remain constant in the Supreme Court s various analyses; others jockey for dominance. Any one of these criteria may prove dispositive in a particular case, but all must be considered. Before addressing the various criteria enunciated and applied by the United States Supreme Court, certain distinctions must be drawn with respect to the types of criminal intent. At one end of the spectrum is the specific intent crime, which requires a purpose to disobey or disregard the law. 9 At the other end of the spectrum is a strict liability crime, which dispenses altogether with the element of intent, or consciousness of wrongdoing, and requires instead only a finding that the individual bears some responsible relation to the proscribed activity. 10 The strict liability crime represents the public welfare offense in its historically pure form. 11 In the vast middle of the spectrum is the general intent crime, which in fact encompasses the majority of modern regulatory crimes, including most environmental crimes and crimes under the mine safety laws. Whereas a specific intent crime requires knowledge that the conduct itself constitutes a crime, a general intent crime requires only that the accused have knowledge of the conduct; that is, knowledge of facts sufficient to render the conduct a crime. The general intent crime thus upholds the venerable principle that ignorance of the law generally is no defense to a criminal charge The majority opinion in Staples almost proudly laid claim to this prescribed uncertainty: As we noted in Morissette, [N]either this Court nor, so far as we are aware, any other has undertaken to delineate a precise line or set forth comprehensive criteria for distinguishing between crimes that require a mental element and crimes that do not. 342 U.S., at 260, 96 L. Ed. 288, 72 S. Ct We attempt no definition here, either. 114 S. Ct. at 1804 (emphasis added). 9 Ratzlaf, 114 S. Ct. at (659-60); Morissette, 342 U.S. at Dotterweich, 320 U.S. at Id. at Ratzlaf, 114 S. Ct. at

4 1.01 EASTERN MINERAL LAW INSTITUTE The distinctions just drawn are necessarily simplistic and, some would say, not very helpful. Virtually every court and commentator to study the issue of criminal intent has expressed both frustration and confusion with the concept. 13 The definitions therefore do not represent fixed and distinct points on a spectrum, but rather linear measures which at some point meet and become blurred. By way of illustration, a hierarchy of culpable states of mind was suggested by the American Law Institute in lieu of the concepts of specific or general intent. As proposed, an act may be done with purpose, knowingly, recklessly, or negligently. 14 Criminal liability for an act done negligently is obviously not the same as criminal liability based on strict liability. However, the line between negligence and strict liability may very often be difficult to discern. In United States v. Balint, 15 for example, the Supreme Court concluded that knowledge was not an element of an offense under the Anti-Narcotic Act of 1914, 16 which prohibited the selling of certain narcotic drugs to persons not having a written order issued for that purpose by the commissioner of internal revenue. The Court determined the statute in question to be a regulatory measure, the purpose of which was to require that any person dealing in drugs ascertain at his peril whether that which he sells comes within the inhibition of the statute, and, if he sells the inhibited drug in ignorance of its character, to penalize him. 17 Analytically, the Supreme Court in Balint simply declared that persons 13 For example, the court stated in United States v. Markowski, 772 F.2d 358, (7th Cir. 1985), cert. denied, 475 U.S (1986): There are very subtle distinctions among kinds of intent. The Model Penal Code recognizes four mental states purpose, knowledge, recklessness and negligence with elaborations possible for each.... The distinctions among them tax the greatest interpreters. The piling of explanation on explanation in an effort to clarify what intent means may have the opposite effect. We have therefore held with rare exceptions,... a court need not elaborate for the jury on the differences between general and specific intent.... A jury should be told only what it needs to know, not what might confuse. 14 Model Penal Code 2.02 (Proposed Official Draft 1962). 15 United States v. Balint, 258 U.S. 250 (1922). 16 Harrison Antinarcotic Act of 1914, 38 Stat. 785, 786 (Comp. St. 6287g q). 17 Id. at

5 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.01 who dealt in drugs bore a responsible relation to the public; as such, these individuals were on notice to ensure that the drugs in which they dealt did not fall within the statute s prohibitions. Arguably implicit in the Court s analysis in Balint was the notion that if an individual sold a prohibited drug, he must have failed to make the requisite inquiry to determine the nature of the drug. In other words, he was negligent and could legitimately be deemed criminally culpable. But what if the person acted responsibly, had the drug tested by a reputable laboratory which informed him, mistakenly, that the drug was something other than what it was? Is this person also criminally responsible under Balint, even though not negligent? The answer to this question seems, unfortunately, to be affirmative. According to the Court in Balint, Congress determined that the possible injustice of subjecting an innocent seller to a penalty was preferable to the evil of exposing innocent purchasers to danger from the drug In other words, innocent intent was, to the Balint court, no defense to such a crime. 19 However, these hypothetical facts were not the facts before the Court in Balint, so it is left to conjecture whether the principle of Balint would apply to these facts. 20 For those who cringe at a system of justice that could allow such an unjust result, a safety net of sorts does exist: In such matters the good sense of prosecutors, the wise guidance of trial judges, and the ultimate judgment of juries must be trusted. Our system of criminal justice necessarily depends on conscience and circumspection in prosecuting officers, Nash v. United States, 229 U.S. 373, Such discretion, of course, is small solace to the practitioner confronted with the threat or reality of a regulatory prosecution. Fortunately, despite U.S. at The Court in Balint also quoted with approval language that good faith or ignorance is not a defense, 258 U.S. at 252 (citing Shevlin-Carpenter Co. v. Minnesota, 218 U.S. 57 (1910)). 20 As explained later in this article, infra at page 9, the principle of Balint would most likely not survive before the present Supreme Court given that the penalty imposed in Balint was a felony. 21 Dotterweich, 320 U.S. at

6 1.02 EASTERN MINERAL LAW INSTITUTE the assertions of occasional commentators, 22 few modern regulatory crimes fall within the category of a strict liability offense. Some level of intent is generally required; the issue is how much and for which elements of the crime. Because intent, or the lack of it, is so often the defense to a regulatory crime, the single most compelling issue is almost always the quantum or nature of proof required for the government to establish criminal culpability Critical Issues in Measuring Criminal Intent. [1] The Language of the Statute. The language of the statute is obviously the first factor in determining if mens rea is an element of the crime. Regulatory statutes most commonly reflect the intent required in one of four ways: (1) by use of the word willfully; 23 (2) by use of the word knowingly; 24 (3) by use of the word negligently; 25 or (4) by omitting any reference to intent at all. 26 However, the lack of any reference to intent in a statute by no means signifies that Congress intended to dispense with scienter as a requirement. Indeed, the general rule, and the starting point for any judicial analysis of a statute s scienter requirements, is that criminal offenses requiring no mens rea have a generally disfavored status. 27 Two principal reasons are cited by the Supreme Court for disfavoring crimes that lack scienter as an element. The most obvious reason is the potential rank injustice that would flow from such a construction. Repeatedly in recent years, the Court has rejected a statutory construction which would criminalize a broad range of apparently innocent conduct. 28 The second reason is less obvious but equally compelling: by finding 22 Robert A. Milne, The Mens Rea Requirements of the Federal Environmental Statutes: Strict Criminal Liability In Substance But Not Form, 37 Buff. L. Rev. 307 (1989). 23 See discussion in main text under willfulness at pages 13 to 15, infra. 24 See discussion in main text at pages 15 to 20; infra. 25 See e.g., Section 1319(c)(1) of the Clean Water Act, which makes it a misdemeanor for a person to, among other things, negligently violate the Act or permit condition. 26 See discussion in main text under this section at pages 8 to 10, infra. 27 Liparota v. United States, 471 U.S. 419, 426 (1985). 28 Id.; see also Staples, 114 S. Ct. at

7 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 scienter to be a requirement, any concern about the law s vagueness or ambiguity is mitigated. 29 This premise ensures that criminal statutes will provide fair warning concerning conduct rendered illegal and strikes the appropriate balance between the legislature, the prosecutor, and the court in defining criminal liability. 30 Most environmental statutes contain explicit language referencing intent. A few exceptions do exist, however. A longstanding misdemeanor statute, the Refuse Act of 1899, makes it unlawful to throw, discharge or deposit from a ship, barge or floating craft, or from the shore or a manufacturing establishment, any type of refuse matter into any navigable water or tributary of the United States. 31 The statute contains no knowledge or negligence requirement and none has been read into it. 32 In contrast, a scienter element has been read into a similar misdemeanor statute, the River and Harbors Act. 33 This Act makes it illegal for any person or corporation to excavate, fill or alter the course, condition or capacity of any port, canal, lake, harbor or channel of a navigable water without a permit issued by the Army Corps of Engineers. 34 In United States v. Commodore Club, Inc., 35 the court recognized the concept of health and welfare offenses can relax the need for a scienter requirement. However, the court did not find reason for this concept s application particularly compelling in that case, given the relatively stringent criminal penalties imposed, the serious consequences of a criminal conviction, See Posters N Things, Ltd. v. United States, 114 S. Ct. 1747, 1754(1994); Liparota, 471 U.S. at 427, ( [R]equiring mens rea is in keeping with our longstanding recognition of the principle that ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity. ). 30 Liparota, 471 U.S. at U.S.C. 407 and See e.g., United States v. White Fuel Corp., 498 F.2d 619, (1st Cir. 1974); United States v. American Cyanamid Co., 354 F. Supp. 1202, (S.D.N.Y.), aff d, 480 F.2d 1132 (2d Cir. 1973); United States v. United States Steel Corp., 328 F. Supp. 354, 356 (N.D. Ind. 1970), aff d, 482 F.2d 439 (7th Cir.), cert. denied, 414 U.S. 909 (1973) U.S.C. 403 and U.S.C United States v. Commodore Club, Inc., 418 F. Supp. 311 (E.D. Mich. 1976). 7

8 1.02 EASTERN MINERAL LAW INSTITUTE and the fact that effective remedies can be achieved through injunctive action [2] The Magnitude of the Penalty. By virtue of the Staples decision, 37 the severity of the statutory penalty now looms as a critical issue in any analysis of a statute s criminal intent requirements. At issue in Staples was a firearm statute that made it a felony, punishable by up to ten years in prison, to possess an unregistered machine gun. The statute was entirely silent as to a mens rea element. Although one factor only in the Court s analysis concerning mens rea, the severity of the penalty was a significant factor in the Court s determination that Congress did not intend to eliminate a mens rea requirement. 38 The issue of the severity of the penalty did not originate with Staples, though it was certainly given new life in Staples. Public welfare offenses, or offenses lacking a mens rea requirement, were historically crimes that carried a nominal penalty. 39 This theme, that the nature and extent of the penalty attached to the offence may be reasonably considered when assessing mens rea, was given birth in the early English cases 40 and is identifiable in the early American cases as well. 41 However, it was not until the Supreme Court s 1943 decision in Morissette that the nature of the penalty emerged as a defining element of a public welfare offense. In Morissette, the Court stated: 36 Id. at Staples, 114 S. Ct. at The Court did not premise its ultimate decision on the felony nature of the statute, however. [W]e note only that where, as here, dispensing with mens rea would require the defendant to have knowledge only of traditionally lawful conduct, a severe penalty is a further factor tending to suggest that Congress did not intend to eliminate a mens rea requirement. Id. at Certainly, the cases that first defined the concept of the public welfare offense almost uniformly involved statutes that provided for only light penalties such as fines or short jail sentences, not imprisonment in the state penitentiary. Id. at Cf. Regina v. Tolson, 23 Q.B. 168, 177 (1889). 41 See Staples, 114 S. Ct. at

9 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 The accused, if he does not will the violation, usually is in a position to prevent it with no more care than society might reasonably expect and no more exertion than it might reasonably exact from one who assumed his responsibilities. Also, penalties commonly are relatively small, and conviction does no grave damage to an offender s reputation. Under such considerations, courts have turned to construing statutes and regulations which make no mention of intent as dispensing with it and holding that the guilty act alone makes out the crime. This has not, however, been without expressions of misgiving. 42 The harshness of the penalty has never been a controlling factor in the Supreme Court s analysis, however. Balint involved a felony offense, a fact which did not concern the Supreme Court. 43 Similarly, the Court in United States v. Freed 44 concluded that a statute making it a felony to receive or possess a firearm which is not registered to him 45 was a regulatory measure in the interest of the public safety. 46 The Court thus 42 Morissette, 342 U.S. at 256 (emphasis added). In Morissette, a defendant was convicted of the felony charge of conversion of property of the United States. The property in question involved spent bomb casings that had been dumped in heaps for several years, exposed to the weather and rusting. Morissette testified he thought the casings were cast-off and abandoned; at no time did he intend to steal or believe he was stealing property. Because the statute was silent as to intent, the trial and appeal courts concluded no criminal intent was necessary, that the government need only show that the defendant intended to take the property. The Supreme Court concluded otherwise and distinguished the statute, founded more in common law, from the new and growing variety of public welfare offenses. The defining basis for the Court s decision in Morissette was the nature of the offense, not the harshness of the penalty. The Court s description in Morissette of public welfare offenses as having relatively small penalties is thus dicta only. As reflected in Staples, however, it is dicta that has taken hold and appears to be flourishing. 43 Balint, 258 U.S. at 252. In Balint, the Court summarily dismissed any constitutional concerns concerning the penalty, stating: It has been objected that punishment of a person for an act in violation of law, when ignorant of the facts making it so, is an absence of due process of law. But that objection is considered and overruled.... Id. 44 United States v. Freed, 401 U.S. 601 (1971) U.S.C. 5861(d)(1964 ed. Supp. V). 46 Freed, 401 U.S. at

10 1.02 EASTERN MINERAL LAW INSTITUTE determined that the statute did not require any specific intent or knowledge that the firearms, or hand grenades in that case, were unregistered. 47 No discussion is contained in Freed concerning the harshness of the penalty. Whatever the panoply of Supreme Court cases may teach us, no criminal defense counsel in the regulatory arena can ignore the issue of the harshness of the penalty after Staples. White collar defendants in environmental and mine safety cases should generally expect to be imprisoned under the current federal sentencing scheme. This fact must be weighed against the intent requirements applicable to each element of the crime charged. As explained immediately below, the issue is not simply whether a statute has mens rea as an element, the issue is which elements of the statute contain mens rea requirements. [3] Lack of Unity Among the Elements. Much of the confusion with respect to criminal intent stems from the fact that criminal statutes often consist of multiple elements, each of which may vary as to the level of intent required. Despite this fact, courts more often than not discuss a statute s intent requirements as though one answer suffices. Strange results may thereby ensue. An example of this confusion is reflected in a comparison of the Freed 48 and Staples 49 decisions, both of which involved the interpretation of a provision under the National Firearms Act. In Freed, the Court found the statute at issue, which prohibited a person s receiving or possessing certain firearms not registered to him, to be a regulatory measure 50 which required no specific intent or knowledge that the firearms were unregistered. 51 In contrast, the Staples decision found the same statute to fall outside the domain of a public welfare offense because (1) it involved a felony offense 52 and (2) it was inconsistent with the American tradition 47 Id. at Id. at Staples, 114 S. Ct (1994) U.S. at Id. at S. Ct. at

11 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 of widespread lawful gun ownership by private individuals in this country. 53 The Court in Staples did not, however, overrule its prior decision in Freed, but simply distinguished Freed. 54 Since Freed also involved a felony, the only apparent distinguishing factor as to why Freed fell in the magic category of regulatory offense with no scienter required and Staples fell outside that same category was the nature of the firearm; hand grenades in Freed versus a machine gun in Staples. The ordinary, reasonable person may have a hard time understanding this distinction. In fact, the discussion in Staples of public welfare offenses was dicta. As the majority opinion acknowledged in Staples, the issues before the Court in Freed and Staples were distinguishable in that they involved different elements of the same crime. 55 In Freed, the Court determined only that the government need not prove knowledge that a firearm was unregistered. In contrast to Staples, the government in Freed apparently conceded it was required to prove knowledge that the items possessed were hand grenades. 56 The Court s decision in Freed to dispense with knowledge as to this element of the crime made sense because registration of the particular type of firearm was the regulatory aspect of the statute. The only real issue for the Court in Staples was whether the predicate element under the statute was knowing possession of a firearm or knowing possession of a particular firearm, i.e., a machine gun. To the extent the statute required registration of only certain firearms, logic and the literal terms of the statute suggest proof of the knowledge of the particular firearm should be required, for this is the essence of the crime. This approach is clearly consistent with the Court s extended discussion of the long history of lawful and largely unregulated gun ownership in this country. 57 The issue is not possession of an unregistered firearm; it is possession of an unregistered machine gun. 53 Id.. at Id. 55 Id. 56 See 401 U.S. at 612 (J. Brennan, concurring). 57 Id. at

12 1.02 EASTERN MINERAL LAW INSTITUTE The counter-argument, of course, was the one advanced by the government in Staples: the very nature of a firearm as a dangerous instrumentality should be, in and of itself, sufficient to put a person on notice to ascertain at his peril 58 if the firearm is required to be registered. The difficulty with this argument, and one of the reasons for the Court s struggle with the issue in Staples, is that the term firearm covers a wide range of weapons, many of which have enjoyed a long tradition of widespread lawful gun ownership by private individuals in this country. 59 The ultimate balance struck by the Court in Staples seems appropriate, especially when coupled with the fact that the statute is designed to reach individuals, as opposed to businesses which have historically been subject to a variety of governmental regulation. In truth, divining which statutes require mens rea and, further, which elements of those statutes require mens rea, almost seems arbitrary or capricious. 60 The lesson to be learned for practitioners of regulatory law is that each element of a statute should be tested for its mens rea requirements, not only by reference to the body of law established by the lower courts in that particular field of law, but also by the broader principles enunciated by the Supreme Court concerning mens rea generally. 58 The quoted language is from Balint, 258 U.S. at S. Ct. at 1799 and (concurring opinion). 60 Perhaps the best evidence of this difficulty is reflected in the case of United States v. Langley, 1994 WL (4th Cir. 1994), opinion vacated and aff d on rehearing (en bank) 62 F.3d 602 (4th Cir. 1995), cert. denied, 116 S.Ct. 797 (1996). In Langley, the defendant was charged with violating 18 U.S.C. 922(g)(1), which makes it unlawful for a person who has been convicted of a felony to possess a gun. The issue before the court was whether 18 U.S.C. 924(c), which makes it a felony to knowingly violate section 922(g)(1), requires the government to prove not only the knowing possession of a gun but also that the defendant knew he was a convicted felon. In the wake of Staples, the original panel opinion concluded that the government was indeed required to prove that the defendant knew he was a convicted felon. On rehearing en banc, the majority of the Fourth Circuit concluded otherwise, finding that the intent requirement imposed by Staples only extended to those elements necessary to avoid prosecution of conduct a reasonable person would otherwise expect to be innocent. 62 F.3d at 607. This indeed seems the more logical approach. Convicted felons simply represent the class of persons subject to regulation; no showing of knowledge on the part of the defendant should be required. 12

13 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 [4] Willfulness. In Ratzlaf, 61 a closely divided Supreme Court interpreted the meaning of the term willfully in a statute which made it unlawful to engage in cash structuring transactions for the purpose of evading the requirement that a cash transaction exceeding $10,000 be reported to the Secretary of the Treasury. 62 In construing the statute which made it a crime to willfully violate this antistructuring law, 63 the Court determined that the government was required to prove not only that the defendant knew that cash transactions in excess of $10,000 were required to be reported by financial institutions, but also that he knew his efforts to evade this requirement were unlawful. 64 Phrased differently, the Court determined that ignorance of the antistructuring law was indeed a defense to that particular crime. 65 The Court in Ratzlaf thus determined that the term willfully required proof of the specific intent to commit the crime. 66 Note though, that this decision is very much tied to the statutory context in which the term willfully appeared. 67 Specifically, the statute provided that [a] person willfully violating the antistructuring statute, which itself required a purpose to evade, was subject to a felony penalty. The Court concluded that to give willfully any other meaning than the specific intent to commit the crime was to render the term superfluous within the statutory scheme S. Ct. 655 (1994) U.S.C. 5324(3) U.S.C Ratzlaf, 114 S.Ct. at See id. at Id. at As stated in Ratzlaf: Willful... is a word of many meanings, and its construction [is] often... influenced by its context. Id., quoting Spies v. United States, 317 U.S. 492, 497 (1943). 68 It was precisely because of a different statutory context that the Fourth Circuit Court of Appeals declined to follow Ratzlaf in interpreting a willfulness requirement appearing in 18 U.S.C ( Whoever... knowingly and willfully falsifies, conceals or covers up... a material fact.... ). United States v. Daughtry, 48 F.3d 829, 830 (4th Cir.), cert. granted and vacated, 116 S.Ct. 510 (1995). Because willfully modified falsifies, the 13

14 1.02 EASTERN MINERAL LAW INSTITUTE Ratzlaf arguably is a case of statutory construction only, a conclusion made even more likely by the split nature of the decision in which four justices dissented. 69 Certainly the dissenters in Ratzlaf clearly articulated their view that the term willfully in criminal law generally refers to consciousness of the act but not to consciousness that the act is unlawful. 70 The dissenters approach constitutes the prevailing interpretation of the term, one which will likely continue to apply in most statutory contexts. Given that the Ratzlaf decision is so closely tied to its statutory context, it s application in the regulatory arena should be limited. At least one environmental statute may be subject to the Ratzlaf rationale, however. The criminal intent standard contained in the Emergency Planning and Community Right-to-Know Act (EPCRA) uses the conjunctive to penalize the knowing and willful failure to report the release of a hazardous substance. 71 Courts are constrained by principles of statutory construction to avoid interpretations that render certain words as surplusage. 72 Consequently, willfully logically should be interpreted as meaning something different than knowingly. The critical difference in this context could reasonably be interpreted as a specific intent standard. In contrast, the Toxic Substances Control Act (TSCA) makes criminal the violation of its provisions if done knowingly or willfully. 73 The use Fourth Circuit found no basis in the language or structure of section 1001 to require proof of an intent to violate the law. Instead, the Fourth Circuit concluded that willfully only required proof of deliberate action with knowledge that the statements were not true. Id. 69 This conclusion is reinforced by the Court s refusal to resort to the statute s legislative history, which contained indications contrary to the majority s interpretation, because it perceived the statutory text to be clear. 114 S. Ct. at 662. Congress has since amended the antistructuring statute, and legislatively overruled the Ratzlaf decision, by adding a new criminal penalty provision which deletes the term willfully. 31 U.S.C. 5324(c) S. Ct. at 664, quoting United States v. Cheek, 498 U.S. 192, 209 (1991) U.S.C (b)(2). 72 As stated in Ratzlaf: Judges should hesitate so to treat statutory terms in any setting, and resistance should be heightened when the words describe an element of a criminal offense. 114 S. Ct. at U.S.C. 2615(b). 14

15 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 of the disjunctive in the statute would appear to save it from a Ratzlaftype analysis. 74 Less clear is how courts will interpret the willful standard when used in a context more akin to the one in Ratzlaf. For example, the Federal Mine Safety and Health Act of 1977 (MSHA) charges an operator with a crime if he willfully violates a mandatory health or safety standard. 75 However, critical distinctions exists between the MSHA provision and the statute at issue in Ratzlaf, which did not involve a public welfare statute. MSHA should logically be deemed a public welfare statute, and accordingly deserving of a less stringent interpretation of its intent standard. Also significant is the fact that the mandatory health and safety standards referenced in section 820(d) do not contain the element of purpose that appeared in the antistructing statute referenced in Ratzlaf. Consequently, willfully as used in section 820(d) will likely continue to be given the more common interpretation consciousness of the act rather than consciousness that the act is unlawful. [5] Knowledge. The term knowingly in a public welfare offense generally signifies a general intent crime, primarily because of the interpretation in United States v. International Minerals and Chemical Corp. 76 In International Minerals, a defendant was charged under the Explosives and Dangerous Articles Act with shipping certain acids in interstate commerce and failing to reflect the required classification of the acids as Corrosive Liquid, in violation of a regulation promulgated by the Interstate Commerce Commission. Knowing violations of this regulation constituted a misdemeanor pursuant to 18 U.S.C. 834(f). Knowledge of the shipment of the dangerous materials was conceded and the only issue before the Court was whether knowledge of the regulation was also required. The Court found the presence of the term 74 For example, in a similar context involving the criminal provisions of the Clean Water Act, prior to amendment, at 33 U.S.C. 1319, the disjunctive willfully or negligently was construed as not requiring specific intent. See United States v. Baytank (Houston), Inc., 934 F.2d 599, (5th Cir. 1991) U.S.C. 820(d). 76 United States v. Int l Minerals and Chemical Corp., 402 U.S. 558 (1971). 15

16 1.02 EASTERN MINERAL LAW INSTITUTE knowingly in the statute to mean only that the crime was not a strict liability offense; the term was not intended to dispense with the general rule that ignorance of the law is no defense, whether the law be a statute or a duly promulgated regulation. 77 The Court thus applied a general intent standard and held that the term knowingly in this context meant that a defendant need only know of the acts made criminal, not the regulation or law which made the acts a crime. However, the presence of the term knowingly was held to preserve the defense of mistake of fact: [a] person thinking in good faith that he was shipping distilled water when in fact he was shipping some dangerous acid would not be covered. 78 This is the key distinction between a statute containing a knowledge requirement and one which does not, such as a strict liability statute. 79 Knowingly, of course, is the intent standard most commonly found in the environmental statutes, 80 and has accordingly been held to establish a general intent crime. The government must therefore prove in environmental crimes that the defendant knows of the conduct that constitutes the violation; the government need not prove, however, that the defendant has knowledge of the statute or regulations or even that his conduct is unlawful. The violative acts must be both voluntary and intentional and not the result of accident or mistake U.S. at Id. at See discussion in text concerning Balint, supra at p See e.g., Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6928(d)(1) and (d)(2)(b) and (C); Clean Air Act (CAA), 42 U.S.C. 7413(c); and Clean Water Act (CWA), 33 U.S.C. 1319(c)(2). Knowledge is also the basis for the criminal penalties contained in the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. 9603(b). 81 See e.g., United States v. Weitzenhoff, 35 F.3d 1275, (9th Cir. 1993)(as amended on denial of rehearing and rehearing en banc), cert. denied, 115 S. Ct. 939 (1995)(CWA); United States v. Laughlin, 10 F.3d 961, (2d Cir. 1993), cert. denied, 114 S. Ct (1994)(RCRA and CWA); United States v. Buckley, 934 F.2d 84, (6th Cir. 1991)(CERCLA); United States v. Reilly, 827 F. Supp. 1076, (D. Del. 1993)(Ocean Dumping Act); United States v. Corbin Farm Serv., 444 F. Supp. 510, (E.D. Cal.), aff d, 578 F.2d 259 (9th Cir. 1978)(Federal Insecticide, Fungicide and Rodenticide Act). 16

17 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 Consistent with International Minerals and the notion that those who deal with dangerous or deleterious devices or products or obnoxious waste materials... are presumed to be aware of the regulation, 82 the government need not prove under RCRA that the defendant knows the waste is listed or identified as a hazardous waste under the statute or that the waste is identified as a hazardous waste within the meaning of the regulations. 83 Any holding to the contrary would permit a mistake of law defense a result obviously inconsistent with a public welfare statute. 84 More troublesome, however, is what a defendant must be proven to know about the character of the waste under RCRA. In Staples, a felony offense, the government was required to prove knowledge that the firearm was in fact a machine gun. 85 Should the government in RCRA be required to prove a defendant knows the waste to be, in fact, hazardous? Several pre-staples decisions suggest something less is required and have approved jury instructions that the defendant knew that the stored material had the potential to be harmful to the others or to the environment; in other words, that it was not an innocuous substance like water. 86 In United States v. Dee, 87 the Fourth Circuit Court of Appeals held it was error to instruct the jury that the defendants had to know the substances involved were chemicals, without indicating that they also had to know the chemicals were hazardous. 88 The error was determined to be harmless, however, in view of the overwhelming evidence that the defendants knew they were dealing with hazardous chemicals. More recently, in United States v U.S. at Laughlin, 10 F.3d at 965; United States v. Self, 2 F.3d 1071, 1091 (10th Cir. 1993); United States v. Goldsmith, 978 F.2d 643, 645 (11th Cir. 1992); Baytank (Houston), 934 F.2d at 613 (5th Cir. 1991); United States v. Dee, 912 F.2d 741, 745 (4th Cir. 1990), cert. denied, 499 U.S. 919 (1991); and United States v. Hayes Int l Corp., 786 F.2d 1499, 1503 (11th Cir. 1986). 84 Self, 2 F.3d at S.Ct. at Self, 2 F.3d at 1091; Goldsmith, 978 F.2d at ; United States v. Hoflin, 880 F.2d 1033, 1039 (9th Cir. 1989)(substituting chemical wastes for stored material ), cert. denied, 493 U.S (1990). 87 United States v. Dee, 912 F.2d at Id. 17

18 1.02 EASTERN MINERAL LAW INSTITUTE Laughlin, 89 the Second Circuit Court of Appeals offered the following caution: [T]he better course is to include the word substantial in jury instructions relating to RCRA. Section 6903(5) clearly provides that before waste will be deemed hazardous within the meaning of RCRA, it must present not simply a potential hazard, but a substantial potential hazard. The jury should have the benefit of the statutory definition. 90 In view of the felony character of the RCRA penalty, the more stringent definition of hazardous waste approved in Laughlin should prevail and be insisted on by criminal defense practitioners. An equally troublesome subject in the environmental prosecutions is the extent to which a defendant must be shown to know that he or she was acting either without, or in violation of, a permit. In the wake of the Staples decision, this debate has been most recently and strenuously played out in United States v. Weitzenhoff. 91 The principal issue in Weitzenhoff was whether, in discharging pollutants covered by defendants NPDES permit, the government had to prove that the defendants knew that their acts or omissions in discharging the pollutants were unlawful under the Clean Water Act (CWA). 92 In defense, the defendants contended that they mistakenly believed their conduct was authorized by the permit. 93 Distinguishing the Staples decision, the Ninth Circuit held that the Clean Water Act was a public welfare statute subject to the principles of International Minerals. 94 The government accordingly did not have to F.3d at Id. 91 United States v. Weitzenhoff, 35 F.3d 1275 (9th Cir. 1994)(as amended on denial of rehearing and rehearing en banc), cert. denied, 115 S. Ct. 939 (1995) U.S.C. 1319(c)(2). 93 Weitzenhoff, 35 F.3d at In a telling footnote, the court noted this defense was mistakenly labeled in a defendant s brief as mistake of fact. Id. at 1283 n.3. As evidenced by the court s opinion, defendants were not asserting a mistake of fact defense, which is a defense preserved by International Minerals, but a mistake or ignorance of the law defense, which is not recognized as a defense under International Minerals. 94 Id. at

19 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 prove that the defendants knew that their acts violated the permit or the CWA. 95 To the extent any question existed following Staples, Weitzenhoff has now reaffirmed the applicability of the public welfare doctrine to at least one environmental statute, specifically the Clean Water Act. 96 At first glance, the same conclusion should be reached with respect to RCRA. However, RCRA presents additional complications because of variations in the statutory language of each provision. Under 42 U.S.C. 6928(d)(2)(A), which makes unlawful the knowing treatment, storage or disposal of hazardous wastes without a permit, all but one court of appeals have found that knowledge of RCRA s permit requirement is not an element of the offense. 97 In contrast, under section 6928(d)(1), which prohibits knowingly transporting hazardous waste to a facility which does not have a permit, two courts have held that the defendant must know that the facility to which the hazardous waste was transported lacked a permit. 98 Absent this knowledge requirement, these courts have reasoned that innocent transporters who rely in good faith upon a facility s representation that it has a permit could be punished Although a vigorous defense was mounted on defendants behalf concerning their purported good faith belief in the legality of their actions, one piece of evidence seriously impaired their cause at trial, and had an effect on appeal: a plant employee apparently testified that one of the defendants instructed him not to say anything about the discharges, because if they all stuck together and did not reveal anything, they [couldn t] do anything to us. Id. at Accord, United States v. Hopkins, 53 P.3d 533 (2d Cir. 1995), cert. denied, 116 S.Ct. 773 (1996). 97 United States v. Wagner, 29 F.3d 264, (7th Cir. 1994); Laughlin, 10 F.3d at 966; United States v. Dean, 969 F.2d 187, 191 (6th Cir. 1992), cert. denied, 507 U.S. 1033; United States v. Sellers, 926 F.2d 410, 415 (5th Cir. 1991); Dee, 912 F.2d 741, 745 (4th Cir. 1990), cert. denied, 499 U.S. 919 (1991); Hoflin, 880 F.2d 1033, , cert. denied, 493 U.S (1990)(9th Cir. 1990); contra United States v. Johnson & Towers, Inc., 741 F.2d 662 (3d Cir. 1984), cert. denied, 469 U.S (1985). 98 United States v. Speach, 968 F.2d 795 (9th Cir. 1992); United States v. Hayes Int l Corp., 786 F.2d 1499, 1504 (11th Cir. 1986). In Hayes, the court indicated this knowledge requirement could be met by proving the defendant failed to make inquiry concerning the facility s permit status. 786 F.2d at Speach, 986 F.2d at 796; Hayes, 786 F.2d at

20 1.02 EASTERN MINERAL LAW INSTITUTE This imputation of a knowledge requirement, which does not otherwise appear in the statute, is certainly consistent with the expressed concern in Staples that innocent persons not be subjected to prosecution for serious crimes. 100 Sections 6928(d)(2)(B) and (C) of RCRA, which forbid the treatment, storage and disposal of hazardous waste in knowing violation of any material condition or requirement of the permit, have been construed to require proof that the defendant knew his conduct violated the permit in question. 101 This construction, which is premised principally on the language of the statute, should remain unchanged following Staples. [6] Responsible Corporate Officer Doctrine. No discussion of the law of criminal intent in the regulatory context is complete without some understanding of what has become known as the responsible corporate officer doctrine. This doctrine was first given genesis over fifty years ago in United States v. Dotterweich, 102 a case which involved a misdemeanor statute under the Federal Food, Drug and Cosmetic Act. 103 One specific question addressed in Dotterweich was whether an individual corporate officer could be held criminally liable under the Act in addition to the corporate defendant. In answering this question in the affirmative, the Court stated: Whether an accused shares responsibility in the business process resulting in unlawful distribution depends on the evidence produced at the trial.... The offense is committed... by all who do have such a responsible share in the furtherance of the transaction which the statute outlaws, namely, to put into the stream of interstate commerce adulterated or misbranded drugs S. Ct. at Self, 2 F.3d at 1091; Dean, 969 F.2d at United States v. Dotterweich, 320 U.S. 277 (1943). 103 Id. 104 Id. at 284 (emphasis added). 20

21 CRIMINAL INTENT IN THE REGULATORY CONTEXT 1.02 Precisely which employees have such a responsible share was left by the Court to the good sense of prosecutors, the wise guidance of trial judges, and the ultimate judgment of juries. 105 Significantly, the statute in Dotterweich was found to be a strict liability statute containing no scienter requirement. Because proof of knowledge was not a prerequisite to criminal liability, unlike most criminal statutes, the concept of responsible share was the Court s effort to address just how far such a strict liability statute could reach within a corporate hierarchy. This concept was subsequently clarified thirty years later in United States v. Park, 106 a case which involved the same strict liability statute as in Dotterweich. As explained by the Court: [T]he Government establishes a prima facie case when it introduces evidence sufficient to warrant a finding by the trier of the facts that the defendant had, by reason of his position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct, the violation complained of, and that he failed to do so. 107 Critical to the determination of criminal culpability is not the defendant s position or title in the corporate hierarchy, although this may be relevant. Rather, it is the defendant s accountability, because of the responsibility and authority of his position, for the conditions which [give] rise to the charges against him. 108 In theory, the responsible corporate officer doctrine should only have applicability to a strict liability statute. As such, the doctrine should have little or no applicability to the vast array of environmental statutes which, by virtue of their explicit mens rea requirements, are not strict liability statutes. However, theory does not always comport with reality. At least one case, United States v. Brittain, 109 injected substantial 105 Id. at United States v. Park, 421 U.S. 658 (1975). 107 Id. at Id. at 675 (footnote omitted). 109 United States v. Brittain, 931 F.2d 1413 (10th Cir. 1991). 21

22 1.02 EASTERN MINERAL LAW INSTITUTE confusion into the applicability of this doctrine with respect to the Clean Water Act. In Brittain, the court suggested, in apparent dicta, that the rationale of the responsible corporate officer doctrine enunciated in Dotterweich applied to section 1319(c) of the Act, which imposed criminal liability on any person who willfully or negligently violated a permit condition. 110 The court made this comparison based on the definitional section of the Clean Water Act which defined person to include any responsible corporate officer, 111 and the fact that the legislative history of the Act was otherwise silent regarding the reason for the addition of this provision. While the Court was unable to discern the reason for the addition of responsible corporate officer to the class of persons subject to criminal liability, the court nonetheless construed it to expand liability under the Act, not limit it. 112 A more appropriate analysis of the applicability of the responsible corporate officer doctrine is contained in United States v. MacDonald & Watson Waste Oil Co. 113 MacDonald involved the felony RCRA violation of knowingly transporting a hazardous waste to an unpermitted facility in violation of 42 U.S.C. 6928(d)(1). The trial court instructed the jury that the defendants knowledge could be established in two ways: by proof of actual knowledge or by proof that the defendant was a responsible corporate officer who must have known or believed that the illegal activity of the type alleged occurred. 114 On appeal, this instruction was held to be error: [W]hile Dotterweich and Park thus reflect what is now clear and well-established law in respect to public welfare statutes and regulations lacking an express knowledge or other scienter requirement, we know of no precedent for failing to give effect 110 Id. at The CWA has since been amended by substituting knowingly for willfully or negligently. 111 Formerly 33 U.S.C. 1319(c)(3), now 33 U.S.C. 1319(c)(6) F.2d at 1419; see Johnson & Towers, Inc., 741 F.2d at 665 n United States v. MacDonald & Watson Waste Oil Co., 933 F.2d 35, (1st Cir. 1991). 114 Id. at